Muy Bueno Bakery sells three different products. Currently, it is not able to meet all of its customers' demand. Using the following information, determine the price of the cake needed to meet the same contribution margin as the pie.

Cake Pie Cookies

Contribution margin $18 $11 $3

Production hours 3 1 0.30

Variable cost $12 $7 $1

Contribution margin/hour $6 $11 $10

Current selling price $30 $18 $5

Cake will have to sell for $30.857

Explanation:

Contribution is sales value less variable cost

Contribution margin (CMR) is the percentage of the selling price that is earned as contribution.

CMR for Pie = 11/18 * 100 = 61.%

Let the price of Cake be y

contribution per unit = y - 12

0.611111111 = y - 12/y

0.6111 y = y-12

12 = y - 0.6111 y

12 = 0.388 y

y = 12/0.3888

y=$30.857

Cake will have to sell for $30.857